HCC faces criticism over surplus levy redistribution

Hybu Cig Cymru (HCC), the body responsible for promoting Welsh red meat, is facing criticism over potential changes in its revised framework agreement with the Welsh government.

Under the proposed new agreement, HCC would only be allowed to retain just 6% of any surplus generated from levy income, with the remaining 94% being handed over to the Welsh government.

Currently, any surplus funds from levy income, collected from farmers and processors, are placed into reserves to be used in emergencies or for operational needs.

See also: HCC increases levy rates for Welsh livestock farmers

Previous HCC boards are understood to have maintained a £1m reserve fund to safeguard the industry in the event of a catastrophic livestock disease outbreak – when levy income would collapse but support for farmers would be paramount.

However, under the proposed new terms, this surplus would no longer be kept within the industry, raising fears the funds could be diverted to purposes unrelated to the Welsh agricultural sector.

This move has sparked concerns that vital funds, previously earmarked for industry crises or working capital, will no longer benefit Welsh farmers and processors during times of need.

The change is seen by many as an indirect tax on farmers and processors, as the money collected is not from taxpayers but from the agricultural community itself.

The Independent Association of Meat Suppliers (Aims) has expressed alarm over the potential impact of this decision, which could leave Welsh livestock farming and meat processing vulnerable in the face of economic pressures.

“This is particularly troubling given the ongoing challenges faced by the sector, including market volatility and environmental pressures,” said Aims spokesperson Tony Goodger.

He explained the funds, once redirected to the Welsh government, would no longer be available to support industry crises, thus exacerbating the difficulties already faced by the farming community.

Discussions between the Welsh government and HCC have focused on the issue of cash reserves, with a revised methodology tentatively agreed upon.

Final details unresolved

The draft was scheduled for review by HCC’s Audit and Risk Committee in February 2025, with the final version expected to be presented to the board for approval in March 2025.

However, the final details of the framework agreement remain unresolved.

An HCC spokesperson said discussions with the Welsh government were still ongoing, and a Welsh government spokesperson also confirmed they were in the process of finalising the framework agreement.

Representatives from the Welsh farming and processing community are calling for further clarity and transparency in the deal.

They urge funds raised through the levy should benefit the industry directly, rather than being redirected to the Welsh government.

Performance review

The Senedd’s Economy, Trade and Rural Affairs (Etra) Committee is currently reviewing the performance of HCC to assess whether it is effectively meeting its priorities.

The inquiry was prompted by an S4C documentary aired last autumn, which exposed serious workplace concerns at HCC, including six formal complaints made against a single individual, raising questions about the organisation’s internal culture and governance.